Jefferies' David Windley has upgraded his call on Molina Healthcare Inc. to "buy" from "hold" after the company posted third-quarter earnings that were "much better" than what analysts had anticipated.

In his research note, Windley said management's execution of cost-cutting initiatives and attractive relative valuation are key factors behind the upgrade. He added that improved health insurance exchange performance played a major role in the company's turnaround this year.

Windley raised his price target for shares to $169 from $152. He also increased his full-year EPS estimates to $9.23 from $7.52 for 2018, $9.38 from $6.88 for 2019 and $10.42 from $7.82 for 2020.